JK Tyre zooms 51% in 4 days, hits fresh 52-week high on robust Q3 results

Shares of JK Tyre & Industries hit a fresh 52-week high of Rs 132, soaring 14 per cent on the BSE in the early morning trade on Friday, after the company reported highest-ever quarterly sales and net profit for the quarter ended December 2020 (Q3FY21). The stock of tyre & rubber products maker zoomed 51 per cent in past four trading days.

The company's consolidated sales grew 26 per cent year on year (YoY) to Rs 2,776 crore, a best-ever for any quarter. Ebitda (earnings before interest, taxes, depreciation, and amortization), meanwhile, doubled to Rs 507 crore and profit before tax (PBT) recorded multifold increase to Rs 343 crore, compared with the corresponding quarter. Ebitda margins came at 18.1 per cent, up 250 basis points on sequential basis.

The strong performance during the quarter was largely driven by the increased demand for passenger, commercial vehicle as well as farm tyres. The continued focus on improvement in operating efficiencies and reduction in interest costs, contributed to improved profitability, the management said.

"JK Tyre's operating performance is a positive surprise. Sequential improvement in gross margins (around 140 bps) seems to be driven by some low cost inventory and is in diversion with the quarterly results reported by one of its key competitor (decline in gross margins by 110 bps). Encouragingly, interest costs continued in downward trajectory signaling further reduction in debt on company's balance sheet," ICICI Securities said in a note.

The brokerage firm said it remains positive on the company amid its market leadership in the commercial vehicles tyre space, which is at the cusp of cyclical revival (OEM).